Chester Valley Bancorp Inc. Reports Earnings of $1.5 Million For
Its First Quarter DOWNINGTOWN, Pa., Oct. 25 /PRNewswire-FirstCall/
-- Chester Valley Bancorp Inc. (NASDAQ:CVAL) announces that the
Company posted earnings of $1.522 million or $0.29 per diluted
share for its first quarter ended September 30, 2004. This compared
to earnings of $1.514 million or $0.29 per diluted share for the
quarter ended September 30, 2003. While earnings were relatively
stable from period to period, the Company reported net interest
income of $5.114 million for the quarter ended September 30, 2004,
an 8.6% increase over the comparable quarter in the prior year.
After years of pressure and a resulting decline in the Company's
net interest margin, the Federal Reserve Bank's recent rate hikes
totaling .75%, have positively impacted the Company's net interest
margin. The net interest margin (computed on a fully tax equivalent
basis) increased to 3.47% during the quarter from 3.41% for the
fourth quarter ended June 30, 2004. Future increases in short-term
interest rates should have a positive impact on the Company's
earnings, as the Company continues to be asset sensitive.
Non-interest income increased to $2.089 million for the quarter
ended September 30, 2004, a 3.7% increase over the quarter ended
September 30, 2003. The increases occurred primarily in investment
services income, including trust fees along with an increase in
deposit fees resultant from a growth in transaction type deposit
accounts (i.e. Consumer and business checking, money market and
savings). The above noted increases were largely offset by an
increase in operating expenses, primarily in compensation and
benefits. In addition to normal salary increases for the year, the
Company has made a significant investment in its future. The
Company expanded its retail brokerage business personnel in
September 2004. Additionally, on a yearly comparison, the Bank
hired seven lending and private-banking relationship managers who
became available as a result of the recent consolidation within the
local community banking market. In addition the Bank expanded its
branch network through the Coatesville branch acquisition from PNC
National Bank in March 2004 and the purchase of the Firstrust
deposits in Exton. Additionally, the Bank opened a loan production
office in Plymouth Meeting, Montgomery County, Pennsylvania, an
area that was largely impacted by the afore-mentioned
consolidation; and a Private Client office in West Chester Borough
to better serve the complex needs of affluent clients and the
professionals who handle their business affairs. At September 30,
2004, total assets increased to $644.7 million as compared to total
assets of $642.1 million at June 30, 2004. At September 30, 2004,
loans receivable, net increased by 1.3% to $400.1 million as
compared to $395.1 million at June 30, 2004. Excluding residential
mortgage loans, which continued to decline, the loan portfolio grew
$9.4 million or 2.9% from June 30, 2004. Additionally, in
anticipation of a rising interest rate environment, the Company
focused its retail sales personnel on variable rate home equity
lines, rather than lock the Bank into longer-term fixed rate
assets. The asset growth was funded with both deposits and Federal
Home Loan Bank advance borrowings. Although the outstanding loan
balances increased by just 1.3%, the Company closed $22.3 million
in construction and commercial loans, of which $20.1 million are
lines of credit, much of which is expected to fund during the next
quarter. Undrawn commercial and construction loans increased by
$11.2 million between June 30, 2004 and September 30, 2004.
Additionally, at September 30, 2004, the Company had a pipeline of
commercial and construction loans of approximately $40.0 million,
which were at various stages of the commitment and customer
acceptance process. The ultimate closing of these loans is
dependent upon a number of factors including but not limited to;
(a) competition within the marketplace, (b) changes in interest
rates during the process and (c) other factors impacting the
customer. In October 2004, the Company received a $750 thousand
principal pay-down on an approximate $2.9 non-performing commercial
mortgage. Additionally, the borrower prepaid interest as a
condition to the Bank's extension of the maturity date on the
remaining balance of the loan. Donna Coughey, President and CEO
stated, "While loan demand has increased, the competition within
our market is intense. Despite this competition, our loan closings
were strong and the future funding of lines of credit closed during
the quarter, as well as the restructuring of the loan portfolio
achieved through June 30, 2004 will positively impact future
earnings. Additionally, our successful acquisition of the Exton
deposits from Firstrust bank, the recent announcement of our
pending acquisition of the Avondale branch from PNC National Bank
and the opening of a de novo branch in Oxford illustrate our
commitment and ability to enhance our existing branch networks
through both external acquisitions as well as internal growth. We
are excited about the recent opening of our Plymouth Meeting loan
production office which we believe will provide us with a stronger
presence in a market that has been impacted by the recent
consolidation within the local community banking industry." Chester
Valley Bancorp Inc. is the parent company of both First Financial
Bank and Philadelphia Corporation for Investment Services. First
Financial's executive offices are located in Downingtown,
Pennsylvania with branches in Exton, Frazer, Thorndale, Westtown,
Airport Village, Brandywine Square, Devon, Kennett Square, Eagle
Square, Coatesville and West Chester. Philadelphia Corporation has
offices in Wayne and Philadelphia. Chester Valley Bancorp stock is
traded on the NASDAQ market under the symbol "CVAL". This press
release contains certain "forward-looking statements", either
express or implied, which concern anticipated future operations of
the Company. While these statements represent management's current
judgment on what the future may hold and management believe these
judgments are reasonable, actual results may differ materially due
to numerous important factors that are described in the Company's
filing on the Form-10-K for the year ended June 30, 2004. The
Company assumes no duty to update these statements should actual
events differ from expectations. CHESTER VALLEY BANCORP INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands) Unaudited September 30, June 30, 2004 2004
Assets Cash in banks Interest-bearing deposits $ 9,977 $ 12,410
12,844 15,352 Total cash and cash equivalents 22,387 28,196 Trading
account securities 7 8 Investment securities available for sale
132,777 130,089 Investment securities held to maturity (fair value
- September 30, 2004, $57,938 June 30, 2004, $57,779) 57,740 59,384
Loans held for sale 963 538 Loans receivable 406,991 401,965
Deferred fees (476) (508) Allowance for loan losses (6,386) (6,331)
Loans receivable, net 400,129 395,126 Accrued interest receivable
3,026 2,652 Property and equipment - net 13,041 13,009 Bank owned
life insurance 5,472 5,414 Real estate owned 54 54 Goodwill 1,171
1,171 Other intangible assets 645 384 Other assets 7,281 6,083
Total Assets $ 644,693 $ 642,108 Liabilities and Stockholders'
Equity Liabilities: Deposits $ 429,049 $ 427,103 Securities sold
under agreements to repurchase 18,265 27,216 Advance payments by
borrowers for taxes and insurance 479 1,433 Federal Home Loan Bank
advances 130,239 120,963 Trust preferred securities 10,310 10,310
Accrued interest payable 668 679 Other liabilities 1,609 2,147
Total Liabilities 590,619 589,851 Stockholders' Equity: Preferred
stock - $1.00 par value; 5,000,000 shares authorized; none issued
Common stock - $1.00 par value; 10,000,000 shares authorized;
5,139,165 and 4,876,484 shares issued and outstanding at September
30, 2004 and June 30, 2004, respectively 5,139 4,876 Additional
paid-in capital 41,166 36,247 Retained earnings - partially
restricted 9,433 13,303 Treasury stock (612 and 583 shares at
September 30, 2004 and June 30, 2004, respectively, at cost) (13)
(13) Accumulated other comprehensive income (loss) (1,651) (2,156)
Total Stockholders' Equity 54,074 52,257 Total Liabilities and
Stockholders' Equity $ 644,693 $ 642,108 CHESTER VALLEY BANCORP
INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts) Unaudited
Three Months Ended September 30, 2004 2003 INTEREST INCOME: Loans
$5,851 $6,094 Mortgage-backed securities 413 342 Interest-bearing
deposits 19 8 Investment securities: Taxable 1,288 546 Non-taxable
320 437 Total interest income 7,891 7,427 INTEREST EXPENSE:
Deposits 1,317 1,430 Securities sold under agreements to repurchase
46 32 Short-term borrowings 86 27 Long-term borrowings 1,328 1,230
Total interest expense 2,777 2,719 NET INTEREST INCOME 5,114 4,708
Provision for loan losses 102 380 Net interest income after
provision for loan losses 5,012 4,328 OTHER INCOME: Investment
services income 1,031 984 Service charges and fees 794 771 Gain on
the sale of: Loans 71 72 Available for sale 77 75 Other 116 112
Total other income 2,089 2,014 OPERATING EXPENSES: Salaries and
employee benefits 2,931 2,440 Occupancy and equipment 736 709 Data
processing 254 233 Advertising 81 29 Deposit insurance premiums 16
15 Other 1,041 961 Total operating expenses 5,059 4,387 Income
before income taxes 2,042 1,955 Income tax expense 520 441 NET
INCOME $1,522 $1,514 EARNINGS PER SHARE (1) Basic $0.30 $0.30
Diluted $0.29 $0.29 DIVIDENDS PER SHARE PAID DURING PERIOD (1)
$0.11 $0.10 WEIGHTED AVERAGE SHARES OUTSTANDING (1) Basic 5,122,108
5,044,667 Diluted 5,276,146 5,209,283 (1) Earnings per share,
dividends per share and weighted average shares outstanding have
been restated to reflect the effects of the 5% stock dividends paid
in September 2004 and 2003. CHESTER VALLEY BANCORP INC. AND
SUBSIDIARIES FINANCIAL HIGHLIGHTS Three Months Ended September 30,
2004 2003 Average interest rate spread (2) 3.42% 3.47% Net yield on
average interest-earning assets (2) 3.47% 3.51% Ratio of average
interest-earning assets to average interest-bearing liabilities
1.04 x 1.04 x Non-performing assets to total assets 0.64% 0.79%
Allowance for loan loss to total loans 1.60% 1.46% Return on equity
11.49% 12.25% Return on assets 0.94% 1.02% Book value per common
share (1) $10.52 $9.84 Closing price of common stock at end of
period (1) $19.78 $20.82 Number of full-service offices at end of
period 12 10 (1) Per share amounts have been restated to reflect
the effects of the 5% stock dividend paid in September 2004. (2)
Percentages are presented on a taxable equivalent basis. The
following details the tax equivalent adjustments in the above
table: Three Months Ended September 30, 2004 2003 Interest Tax
Adjusted Interest Tax Adjusted Income Adjustment Income Income
Adjustment Income (Dollars in thousands) Loans $5,851 $19 $5,870
$6,094 $14 $6,108 Investments 2,040 120 2,160 1,333 163 1,496 Total
$7,891 $ 139 $8,030 $7,427 $ 177 $7,604 DATASOURCE: Chester Valley
Bancorp Inc. CONTACT: Joseph T. Crowley, Treasurer & Chief
Financial Officer, Chester Valley Bancorp, +1-610-269-9700 ext.
3085
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